Work Smarter: UBS

This article was taken from the April issue of Wired
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Abolish budgets

In November 2003, 20 senior executives at UBS Wealth Management gathered for
an off-site meeting in a windowless basement room in central
London. They were running the biggest private bank in the world,
but with only four per cent of a highly fragmented market they
could see enormous opportunities for growth. And as they dug deeper
into the things standing in the way of growth, a familiar foe
emerged: the budgeting process. So they decided to scrap it. "This
was not driven from a theoretical angle at all -- it was pure
business logic," recalls Toni Stadelmann, then chief financial
officer.

But budgeting could not just be thrown out without replacing it
with other ways of motivating client advisors -- personal bankers
to UBS' clients. The new model was built from the ground up. Rather
than comparing the performance of client advisors with a budget
number, Stadelmann and his team evaluated them against themselves
(their previous year's results) and against their peers. "We
created monthly measures of actual performance on the usual
criteria -- revenues, net new money, cost/income ratio. And then we
ranked all the 'desks' (groups of client advisors). In essence, we
created performance league tables, and we made the results
available for everyone to see."

And what about the results? UBS Wealth Management achieved four
years of double-digit growth until 2006/7, when the financial
crisis forced UBS into consolidation mode. And the cultural shift
was also enormous. "Now we spend our time discussing clients and
market opportunities, rather than negotiating figures."

Julian Birkinshaw is Professor of Strategic and
International Management at the London Business School